Small, mid caps make big splash in June quarter: Crisil

Attractive valuations coupled with positive market sentiment driven by political stability after a new Government took charge at the Centre helped small and mid-cap stocks outperform the broader market in the June quarter, rating agency Crisil has said.

"The Crisil-Amfi small and midcap fund performance index," which represents the performance of small and mid-cap funds, rose 28.99 percent during the quarter, significantly higher than the large cap fund performance index, which jumped 18.92 percent and diversified equity fund performance index that shot up 23.95 percent, Crisil said in a report today. Against this, the 50-share NSE benchmark Nifty gained just 13.67 percent in the April-June period, it said.

The rating outfit cited attractive valuations and positive market sentiment for the robust show by small and mid-cap shares. Within the small and mid-cap category, Crisil fund rank 1 funds (as of the quarter ended June 2014) were overweight on sectors such as industrial products and chemicals. The average over-exposure of the Crisil fund rank 1 funds vis-'-vis the category average to these sectors during the quarter was 4.91 percent and 3.10 percent, respectively.

This helped them outperform the category, the report said. At the fund house level, Birla Sun Life Mutual Fund led the tally of top-ranked schemes for the quarter with eight funds under Crisil fund rank 1, followed by UTI MF (6), and ICICI Prudential MF and Reliance MF (5 each,) Crisil said. The latest Crisil MF ranking covers close to 90 percent of the average assets under management of open-ended schemes at the end of June, the report added. While "Crisil-Amfi small & midcap fund performance index" outperformed the broad market-Nifty 500 (up 18.69 percent), it could not beat the category benchmarks Nifty Midcap index (up 30.32 percent) and Nifty small cap index (up 48.41 percent), it said.

The underperformance was mainly due to average exposure of about 22 percent to large-cap stocks (top 100 stocks based on daily average market capitalisation on the NSE), the report added.